November natural gas is set to open 4 cents lower Thursday morning at $3.62 as traders anticipate a government report showing another round of above-average storage builds and the market puts in a new low overnight. Petroleum markets rose in overnight trading.
With mild weather remaining on the horizon for the foreseeable future, storage injections may continue well into November, not only prolonging the build in inventories but shortening the available time for withdrawals. A stout build in inventories is likely next week as forecasts call for above-normal accumulations of degree days for the week ending Oct. 25.
The National Weather Service (NWS) predicts below-normal accumulations of combined heating and cooling degree days in major population centers. NWS says New England will see 95 degree days (DD), or 25 fewer than normal, and the Mid-Atlantic will have to endure 92 DD, or 12 fewer than its seasonal tally. The greater Midwest from Ohio to Wisconsin should experience 99 DD, or 14 fewer than normal.
Estimates of this week's report are closely bunched within the vicinity of the century mark and should give an idea of how much reduction in the deficit is in the cards. ICAP Energy forecasts an increase of 98 Bcf, and Citi Futures Perspective is calling for a 103 Bcf injection. A Reuters poll of 23 traders and analysts showed an average 97 Bcf with a range of 90-103 Bcf.
Industry consultant Genscape utilizes a combined sample of storage facilities as well as supply/demand-based analyses to formulate its 98 Bcf injection estimate. The company said its models "expect the EIA [Energy Information Administration] will announce 98 Bcf of gas was injected during the week ending Oct. 16. The forecast is a composite of Genscape's supply and demand model -- which is forecasting an 84 Bcf injection -- and our adjusted flow sample of storage facilities, which is predicting a 101 Bcf injection.
"A 98 Bcf would be the second largest injection for week 42 in the past five years (103 Bcf was injected for the week in 2011). Current working gas inventories stand at 3,299 Bcf. Our models have been in the 98 Bcf range for this storage week for several weeks now, resulting in only minor modifications to our end-of-season estimate of 3.55Tcf," the firm said.
Bentek Energy predicts a 99 Bcf increase utilizing its flow model but offers the caveat that that number may be too high. It said there was a risk to the forecast in that NGPL reported a large 4 Bcf "transfer" of gas that Bentek is treating as a reclassification from base gas to working gas. If this reclassification assumption is not correct, Bentek says its estimate might be too high.
In overnight Globex trading December crude oil rose 56 cents to $81.08/bbl and December RBOB gasoline added 2 cents to $2.1285/gal.